Tuesday, June 23, 2009

Today was a very difficult day to analyze waves but we did bottom in the 880s as I expected. From what I can see we did finish the 5th wave talked about yesterday (now labeled (v)), it bounced off the top set of my targets. Then for the remainder of the day there was a sideways movement of corrective nature telling us that we are not only in wave 3 but this wave is not yet complete. An impulsive wave structure needed to take place to prove that we reached some sort of bottom. This did not take place so there will probably be a very bearish market ahead of us, at least for the short term. The is likely because the "point of recognition" or "3rd of a 3rd" wave is ahead of us.

On a bullish note the market is still in an oversold condition but these indicators can ride on the floor for a long period of time; the market does not have to rebound when it is in an oversold condition. There are also resistance levels coming but again with enough people behind any side of the market, it can go anywhere. Also we may have had the golden cross today in which the 50 and 200 days moving averages crossed. But again the market is not required to do anything and these are lagging indicators. It is an important psychological point though.

The labels were changed by one degree and may need to be changed again if this truly is primary wave 3. This could turn into some other correction of primary wave 2 such as a double zigzag or a larger zigzag not yet completed. More market information will tell us this.

The whole correction is looking the same as the last few we have seen off the top; complex and hard to read! I spent a large part of the day trying to interpret the sideways market action. It was difficult because some waves look to be either 3-wave or 5-wave structures; even worse some look like 3-wave or 5-wave structures only to have a paradox tell you it is just the opposite. I tried various counts but ran into many dead ends. The best looking count is shown above.

One thing that is clear to me is that this is not one large triangle but does contain a triangle somewhere within it given the overlap and small zigzags. Another option is an expanding triangle (y) wave in development. However this does not look as nice and is rare so it is not my primary count.

Wave (v) was very sloppy and its count is also up for grabs.

Problems:Some wave look more like 3-wave structures yet are impulsive, at least in my count.

Some look more like 5-wave structures yet are 3-wave structures, at least in my count.

The (v) wave looks sloppy and there is not much wedging.

Alternatives:An expanding triangle (y) wave not yet finished.

This sideways action is actually an impulse with a wide correction.

(v) was actually a leading diagonal (3-3-3-3-3?) and we retraced it nicely today, about 78.6%, a target.

This wide correction is actually part of (iv) not yet completed. That would seem very wide however.

Today was a very difficult day to analyze waves but we did bottom in the 880s as I expected. From what I can see we did finish the 5th wave talked about yesterday (now labeled (v)), it bounced off the top set of my targets. Then for the remainder of the day there was a sideways movement of corrective nature telling us that we are not only in wave 3 but this wave is not yet complete. An impulsive wave structure needed to take place to prove that we reached some sort of bottom. This did not take place so there will probably be a very bearish market ahead of us, at least for the short term. The is likely because the "point of recognition" or "3rd of a 3rd" wave is ahead of us.

On a bullish note the market is still in an oversold condition but these indicators can ride on the floor for a long period of time; the market does not have to rebound when it is in an oversold condition. There are also resistance levels coming but again with enough people behind any side of the market, it can go anywhere. Also we may have had the golden cross today in which the 50 and 200 days moving averages crossed. But again the market is not required to do anything and these are lagging indicators. It is an important psychological point though.

The labels were changed by one degree and may need to be changed again if this truly is primary wave 3. This could turn into some other correction of primary wave 2 such as a double zigzag or a larger zigzag not yet completed. More market information will tell us this.

The whole correction is looking the same as the last few we have seen off the top; complex and hard to read! I spent a large part of the day trying to interpret the sideways market action. It was difficult because some waves look to be either 3-wave or 5-wave structures; even worse some look like 3-wave or 5-wave structures only to have a paradox tell you it is just the opposite. I tried various counts but ran into many dead ends. The best looking count is shown above.

One thing that is clear to me is that this is not one large triangle but does contain a triangle somewhere within it given the overlap and small zigzags. Another option is an expanding triangle (y) wave in development. However this does not look as nice and is rare so it is not my primary count.

Wave (v) was very sloppy and its count is also up for grabs.

Problems:Some wave look more like 3-wave structures yet are impulsive, at least in my count.

Some look more like 5-wave structures yet are 3-wave structures, at least in my count.

The (v) wave looks sloppy and there is not much wedging.

Alternatives:An expanding triangle (y) wave not yet finished.

This sideways action is actually an impulse with a wide correction.

(v) was actually a leading diagonal (3-3-3-3-3?) and we retraced it nicely today, about 78.6%, a target.

This wide correction is actually part of (iv) not yet completed. That would seem very wide however.

My trading philosophy is 95% based on my own Elliott Wave analysis of the S&P 500. I try to keep my analysis and trading as simple as possible and do not use trend lines, channels, or definite retracement, price, or time targets. To me, inspecting the proportionality and symmetry of a market's price structure is the key to mastering the principle; it is through this that low-risk, high-reward trading opportunities are found.

Because they are the only things I look at when trading, the quality of the charts I post on this blog are very important to me. I think you will find my work to be the best Elliott Wave analysis of the S&P 500 on the internet.